In Iran, as in the rest of the world, land and water for agricultural production is under pressure. Integrating irrigation and drainage management may help sustain intensified agriculture in irrigated paddy fields. This study was aimed to investigate the long-term effects of such management strategies in a newly subsurface drained paddy field in a pilot area in Mazandaran Province, northern Iran. Three strategies for managing subsurface drainage systems were tested, i.e., free drainage (FD), midseason drainage (MSD), and alternate wetting and drying (AWD). The pilot area consisted of subsurface drainage systems, with different combinations of drain depth (0.65 and 0.90 m) and spacing (15 and 30 m). The traditional surface drainage of the region’s consolidated paddy fields was the control. From 2011 to 2017, water table depth, subsurface drainage system outflow and nitrate, total phosphorous, and salinity levels of the drainage effluent were monitored during four rice- and five canola-growing seasons. Yield data was also collected. MSD and AWD resulted in significantly lower drainage rates, salt loads, and N losses compared to FD, with MSD having the lowest rates. Phosphorus losses were low for all three practices. However, AWD resulted in 36% higher rice yields than MSD. Subsurface drainage resulted in a steady increase in canola yield, from 0.89 ton ha−1 in 2011–2012 to 2.94 ton ha−1 in 2016–2017. Overall, it can be concluded that managed subsurface drainage can increase both water productivity and crop yield in poorly drained paddy fields, and at the same time reduce or minimize negative environmental effects, especially the reduction of salt and nutrient loads in the drainage effluent. Based on the results, shallow subsurface drainage combined with appropriate irrigation and drainage management can enable sustained agricultural production in northern Iran’s paddy fields.